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Tuesday, 19 August 2014

Fairmont St Andrews sold for £32m

One of Scotland’s most prestigious golf resorts has changed hands for £32.4 million in a deal between property investors.

Kennedy Wilson Europe Real Estate has agreed to buy the luxury Fairmont Hotel in St Andrews from SABD Holding, which is ultimately owned by American private equity firm ARES.

The 209-room hotel and resort, set within 520 acres of land, is operated by Fairmont Hotels and Resorts under a management agreement running until 2031.

The hotel comes with conference facilities, two four-bed manor houses, a fitness centre and spa, as well as several food and beverage offerings. It also has two 18-hole golf courses, including the 7,230 yard Torrance Course.

The championship course, originally designed by golfer Gene Sarazen and former European Ryder Cup captain Sam Torrance, pictured, was the final qualifying venue for the 2010 Open Golf Championship.

Kennedy Wilson Europe said the resort presents “a number of exciting asset management and value-add opportunities”.

“Opportunities for both further strategic investment and capital expenditure exist, including upgrades to the club house and other amenities within the hotel,” it said.

President and chief executive Mary Ricks said: “This is an excellent addition to our portfolio – a high-quality and well-managed hotel, which represents our second hotel transaction within two months.

“Furthermore this asset provides a number of good opportunities to leverage our extensive asset management expertise through which we expect to be able to add significant value over the medium term.”

The deal marks the second luxury hotel purchase for Kennedy Wilson Europe, following the €29.8m (£23.9m) acquisition of Dublin’s Portmarnock Hotel in June.

The latest acquisition is expected to complete later this month and will be funded from the company’s cash pile.

The Fairmont St Andrews was put on the market earlier this year with a price tag of £37m. At the time the seller stressed that it was the physical property that was being sold and that Fairmont Hotels would continue to run the resort through its managed contract.

Fairmont’s sellers had previously said the disposal was not linked to the hotel’s pre-tax losses of £12.8m for 2012, posted earlier this year. There had actually been a gross profit in 2012 but it was wiped out by a £10.6m “impairment charge” on the value of the property, and other adjustments.

The hotel’s performance is expected to get a boost from the Ryder Cup in Scotland this year and the Open in St Andrews in 2015 – the previous Open in the home of golf, in 2010, resulted in a record-breaking year for the Fairmont St Andrews.

A continued knock-on effect of increased visitors from the US is expected following the tournaments.

Fairmont manages hotels around the world, including the iconic Savoy Hotel in London and the Plaza in New York.